What’s going on with Trump’s tech tariffs?
This weekend, investors got a rare gift from the Trump administration, under the form of a tech tariff reprieve. Or so they thought.
True to Trump-era form, the relief came wrapped in mixed messages and policy pivots, causing enough confusion to keep Wall Street analysts scratching heads.
After rattling markets with sweeping tariffs on Chinese imports, president Donald Trump belatedly added a key carve-out: consumer electronics including smartphones, laptops, memory chips and flat-screen displays, would not be hit with the new levies.
The news sparked a rally in tech stocks. Futures surged and Apple investors exhaled – albeit temporarily.
Apple’s near miss
Apple shares leapt 5.5 per cent in pre-market trading on Monday, recovering from a two-week slump of over nine per cent as fears mounted that iPhones, which are mostly made in China, would face tariffs as high as 145 per cent.
Had that gone ahead, analysts warned it could have completely upended the company’s pricing strategy.
Citi slashed its earnings forecasts through to 2027, lowering its price target to $245, citing “macro uncertainty”.
This move cautions investors that Apple’s long term profit growth may slow under current conditions where tariffs, supply chain pressure, and general volatility could hurt Apple’s bottom line in the medium to long term.
Yet, Matt Britzman, senior equity analyst at Hargreaves Lansdown, noted that things could have been worse and that actually, pause could give Apple and investors some breathing room.
“The net effect is positive for tech, especially for giants like Apple, which could’ve seen their entire pricing strategy thrown into disarray under the proposed 145 per cent tariff”, he said.
A pause, rather than a pivot
The carve out, announced late Friday, covers more than 20 product categories, including semiconductors and computer hardware.
But this was not a complete U turn either, or at least not officially.
Commerce secretary Howard Lutnick was quick to clarify that the exemptions were only “temporary”, and that a new set of tech-specific tariffs would roll out within two months.
Trump echoed that sentiment on Sunday, posting on social media: “We are taking a look at semiconductors and THE WHOLE ELECTRONICS SUPPLY CHAIN“, he wrote, adding that there were “no exceptions”.
“It was the tech sector’s turn to ride the tariff rollercoaster”, said Ben Barringer, global tech analyst at Quilter Cheviot. “As ever, in Donald Trump’s world the only certainty is uncertainty”.
Wall Street’s relief rally
Markets responded swiftly. Nasdaq futures rose 1.5 per cent, S&P 500 futures jumped 1.3 per cent, and the Dow was up nearly one per cent.
The so-called magnificent seven tech giants all posted gains, with Apple and Nvidia leading the charge.
For now, investors are betting that the worst of the tech tariffs won’t materialise, or at least not immediately.
“The removal of the worst-case scenario is an element of support”, said Alberto Gegra at Equita. “It helps to avoid a total block of supplies.”
Still, safe haven assets are flashing warning signs. Gold hit record high, the US dollar weakened sharply, treasury yields fell. “Markets remain emotionally charged”, said Mark Hackett at Nationwide.
What if the tariffs had stuck?
Had the carve out not happened, Apple and other consumer tech firms would have faced a brutal cost spiral.
The price of iPhones and MacBooks could have surged, consumer demand may have weakened, and the sector could’ve relived the kind of supply chain chaos not seen since the COVID 19 pandemic.
“The impact on earnings remains to be seen”, said Barringer, “but with earnings season kicking off, every comment will be dissected to gauge the true cost of the trade war.”
Ironically, we might see a short term boost to earnings as firms rush to secure components like semiconductors and other tech gear ahead of any potential tariffs. A strange twist of tariff logic.
Where this is going
The White House insists this is all part of a bigger strategy: replace blanket tariffs with targeted, sector-specific duties that could shift semiconductor production back to US soil.
That has implications not just for Apple, but for countries like Taiwan, South Korea and Japan, all deeply embedded in the global tech supply chain.
“Trump may state he wants more semiconductors made in the US”, Barringer noted, “but tech-heavy nations appear to be in pole position to negotiate a deal”.
The market is leaning optimistic for now. Vital Knowledge analyst Adam Crisafulli likened the moment to the bailout of Bear Stearns or the collapse of Silicon Valley Bank.
“The market is leaning toward the former”, he said, “but the present trajectory points to the latter.”
In Trump’s tariff world, today’s reprieve could be tomorrow’s escalation. Investors are watching closely. Because even a temporary pause might not be enough to contain what Crisafulli ominously called a “tsunami”.